july 2010 report from health care reform now

8/8/2019 July 2010 Report From Health Care Reform Now

1/18

HEALTH CARENOW!FOR AMERICA

QUALITY, AFFORDABLE HEALTH CARE WE ALL CAN COUNT ON.


2/18

Health Care for America Now is a national grassroots coalition of more than 1,000 organizations in

46 states representing 30 million people. HCAN spent $51 million over the past two years in the fight to

win passage of health reform and to keep Congress from being steamrolled by corporate special interests.

HCAN gratefully acknowledges the contributions of Diane Archer, Melissa Cohen, Gian Johnson and

Deepika Mehta in the preparation of this report.


3/18

THE AFFORDABLE CARE ACT, signed into law by

President Obama on March 23, 2010, was one of

the most significant domestic achievements in

American political history. Nearly a century after

President Theodore Roosevelt first broached the

idea of national health reform in 1912, the

Affordable Care Act represents an historic steptoward ending the insurance industrys stranglehold

on our health care, eliminating the worst insurance

company abuses and guaranteeing that all

Americans have quality and accessible health care

they can afford.

Because private health insurance will be expanded

to cover millions more people, many with the

assistance of tax credits, Congress included

provisions in the law to improve the quality

and value of private coverage for everyone. One

suchprovision createsstandardsthatmake

sure healthplansspendaminimumamount

ofpremium revenue onmedical care.These

benchmarks are known as medical-loss ratios

(MLRs), and they represent the portion of premium

revenue insurers pay out to doctors, hospitals

and other health care providers for clinical care.

The non-medical expenses funded by premiums

include salaries, profits, lobbying, advertising,

marketing, agent commissions, overhead, and

underwriting (the industry term for identifying

and excluding or charging very high premiums to

applicants with various health conditions). The

MLR standards are critical to curbing the industrys

anti-consumer practices, controlling rising

premium costs, squeezing value out of premiums

paid by private and public customers, and ending

the relentless profiteering of health insurance

companies.

Specifically, the Affordable Care Act requires insurers

to spend on patient care at least 80 percent of

health plan premiums collected from individuals

and small employers and 85 percent of premiums

from large employers.1

Startingin2011, healthplansmust rebate

to consumersand employersthe difference

betweentheminimumsandactualspending

onhealth care. Ifthe newlawhadbeenonthe

booksin2009, the sixlargestfor-profithealth

insurance companieswouldhave been required

to refund $1.9 billioninthatyear alone for

spending too much on profits, CEO pay and

administration, according to a report by a Wall

Street analyst (see Table 1).2

Despite the rhetoric from health insurers, redirecting

this amount of money to benefit consumers and

employers would not represent a severe blow

to the enormously wealthy health insurance

industry. The top five for-profit health insurers

alone recorded $12.2 billion in profits in 2009.3

Without the minimum medical-loss ratios, which

still are well below the average MLRs achieved in

the 1990s,4 health plans would continue to spend

excessively on profits, bloated CEO pay packages,

lobbying and administrative activities designed to

take advantage of consumers.

To enforce the MLRstandardsandachieve these

savings, the DepartmentofHealthandHuman

Services(HHS)mustbeatbackthe insurance

industryssophisticated effortstoundercutthe

law. If the rules are implemented as intended,

the Affordable Care Act will hold accountable an

industry that abuses millions of customers when

New Health Insurance Premium Rules

Will Control Costs for Families, Businesses

Industry Trying to Undercut Congress,Weaken Provision Worth $1.9 Billion to Customers


4/18

they need health benefits the most.Ifinsurers

are successfulat redefiningmedical care, they

will continue rippingoffAmericans,many of

whom have no choice of health plans because

of relentless industry consolidation and market

concentration. That is why the insurance industryand its Washington-based mouthpieces, Americas

Health Insurance Plans (AHIP) and the Blue Cross

Blue Shield Association (BCBSA), are fighting so

vigorously to undermine the law. They want to

expand the definition of allowable medical

expenses to include costs that are not directly

related to the delivery of care and have not

historically been classified as medical. They want

to strengthen their ability to maximize profits and

skirt incentives to reduce cost.

The Affordable Care Act assigned to the National

Association of Insurance Commissioners (NAIC)

the task of making detailed recommendationsto HHS on the MLR standards. The industry is

treating this as an opportunity to undercut the

laws provisions on this important market reform.

Insurance companies have deployed more than

1,700 lobbyists and company executives at periodic

NAIC meetings in a bid to preserve the status quo

and overwhelm regulators (while drowning out

the voices of the 29 members of the NAIC consumer

panel).5 Insurers have used virtually unlimited

resources to hire law firms, lobbyists and consultants

to drown the NAIC in paperwork. They have filedalmost 160 comment letters totaling more than 600

pages expressing their wishes and concerns about

MLR rules, compared to 23 letters from consumers

and business owners who would potentially benefit

from the health care law, according to Senator Jay

Rockefeller of West Virginia.6

Insurance company shareholders are betting the

companies will wear down political support for the

law and ultimately pressure HHS to retreat from

the clear intent of Congresseven though HHShas been aggressively implementing other parts

of the law. Managed-care stocks are valued as if

the law will be implemented as written, said one

Wall Street analyst. When reform gets reformed,

he said, the stocks will get a boost.7 This rhetoric

motivates the industry, and the insurers hope

victories at the NAIC will blunt market reforms in

the short-term and frustrate full implementation of

the law in the long term.

The modern era of private health insurance greed

began quietly in 1994, when the nations non-

profit Blue Cross-Blue Shield plans changed their

national bylaws to enable the companies to convert

to for-profit entities.8 This event revolutionized

the industrys finances to the detriment of the

American public. Regional for-profit health insurers


5/18

began consolidating into powerful national

corporations owned by private investors.9 For

example, WellPoint the biggest for-profit private

health insurer by membership, was cobbled

together from formerly non-profit Blue Cross plans

in 14 states.

10

Today 99 percent of U.S. metropolitan areas have

excessive concentration of power in the health

insurance markets.11 Yet even as insurers have

built monopoly power, they have been unwilling

or unable to leverage their huge market shares to

restrain growth in medical costs; rather they have

raised premiums and reduced the share of premiums

spent on medical care.12 And that goes a long way

in explaining their long history of abusing the

public, denying needed patient care and providingdubious rationales for their pricing actions.13

Healthinsurersmedical-loss ratioswere

95percent, onaverage, in1993. Over the

next 17 years, investor-owned health insurers

reduced spending on actual medical care to an

average of 81 percent of premiums collected,

according to a study by PricewaterhouseCoopers

and company filings with the U.S. Securities and

Exchange Commission.14 This occurred because

premiums continued growing faster than medicalinflation.15 At the same time, insurance industry

consolidation and negotiating power accelerated16;

insurers rigged the system to short-change

reimbursements for doctors and hospitals17; and

many major drugs lost patent protection and

were replaced by less expensive generic versions.18

The remaining 19 percent of premiums went to

profits, executive salaries, lobbying, marketing,

administrative expenses, sales commissions, and

the cost of weeding out sick people whose conditions

might make them unprofitable to insure.19

Inthe individual and small-group markets, insurers

routinely operate with medical-loss ratios that are

much lower than average. A 2008 study of these

markets found many as low as 60 percent.20

Analysts and investors view the medical-loss ratio

as an indicator of future industry earnings and as

a measure of an insurance CEOs business acumen.

When the percentage rises, it suggests the volume

and cost of care ate into profits, and when it declines

Wall Street applauds companies and their executives.

For example, Barrons recently published an article

about Coventry Health Care, concluding that the

companys CEO, Allen Wise, is:

known for his strict attention to costs. Under his

guidance, Coventry was able to reduce the medical-loss

ratio, or MLRthe percentage of premium revenue used

for medical coststo 80.2% in this years first quarter

in its commercial group, a decline of 70 basis points,

or 0.7%, from the year-ago period. Operating margins

jumped to 5.4% in the quarter from 1.8% a year ago,

while earnings of $97.3 million, or 66 cents a share,

far outstripped analysts expectations.21

There are significant geographic variations in

medical-loss ratios among and within the same

insurance holding companies, according to data

compiled by Wall Street analysts. Some health plans

in some states devoted 94 cents of every premium

dollar to health care benefits, while others spent

as little as 33 cents.22 Consumers are kept in the

dark about these vast differences because such

benchmarks largely are obscured in Securities and

Exchange Commission filings. Consumers investingthousands of dollars in health plan premiums

typically have minimal data to guide their purchase

decisions or explain where their premium dollars go.

The data in Tables 2, 3 and 4 show the substantial

gap in health spending between the Affordable

Care Acts new standards and selected health

insurance company subsidiaries.

Considerable disparities in patient spending are

evident when aggregated large-group, individual

and small-group markets are compared. Last yearthe biggest insurers used about 15 cents out of

every premium dollar paid by large employers

for administrative costs and profits, while more

than 26 cents out of every premium dollar in the

individual market went to administrative costs and

profits (Table 5).23 Self-insured employers typically

pay less than 10 cents out of each health care dollar,

and the federal Medicare program spends less than

3 cents on non-medical services (Figure 1).24


6/18


7/18

plans that participate in the FEHBP, the typical

MLR is around 95 percent.34 These programs,

as well as Medicare and Medicaid plans run by

private companies, are profitable for insurers, as

proven by the intense competition that exists in

those markets. The public Medicare program hasconsistently spent more than 97 percent of its

federal benefit outlays on medical care since 1993,

setting the gold standard for most efficient health

plan.35 (Figure 1)

In California, major private plans with the highest

medical-loss ratios in 2007 ranged from 90.6 to

97.1 percent.36 Those tend to be non-profit and

pay their executives less than the large, for-profit

health insurers. One of the nations largest health

plans, the non-profit Kaiser Permanente healthmaintenance organization, had a 92.2 percent

MLR in 2009. Since 2004, it has never dropped

below 91.6 percent, according to analyst John Rex

of J.P. Morgan.37

As noted earlier, company reports filed with state

regulators suggest that without changes to their

business models, many of the nations largest

investor-owned health insurers will fall short of

the MLR standards and face substantial rebaterequirements.

Table 1 (Page 4) shows how much money each of

the six largest companies would have to rebate to

customers if the health care law had been in effect

in 2009. If HHS calculated MLRs in the same way

that insurers have done for years, UnitedHealth

would owe $867 million in rebates, followed by

WellPoints $614 million, Aetnas $143 million,

Humanas $130 million, Coventry Health Cares

$81 million, and CIGNAs $44 million. That is atotal of $1.9 billion in rebates for only those six

companies.38

That amount is a necessary cap on the industrys

excesses and will limit the extent to which soaring

premiums are used on activities that confer no

tangible benefit on enrollees. However, it does

not begin to threaten the solvency of these large

insurers, as some have implied to regulators. The

five largest for-profit health insurers posted record

profits of $12.2 billion in 2009.

On July 20, 2010, UnitedHealth reported a second-

quarter profit of $1.12 billion, a 31 percent increase

from the same period a year earlier. The companysconsolidated MLR fell 2.1 percentage points to 81.5

percenta decline that drove profitability and

surprised Wall Street analysts.39

The $892 billion-a-year health insurance industry40

is lobbying strenuously to prevent federal officials

from adopting the MLR standards without major

concessions to health plans. Insurers have an army

of operatives working behind the scenes at stateinsurance departments and at the NAIC.41

This is the biggest issue right now for the companies,

said Kansas Insurance Commissioner Sandy

Praeger, who chairs the NAIC health-insurance

committee.42 AHIP, BCBSA and its member insurers

have two goals: 1) redefine medical-loss ratios to

give insurers vast discretion over what expenses

they may classify as clinical and administrative

costs, and 2) craft as many exceptions, transitions,

and delays as possible to avoid meeting even themeager compromised standards that insurers seek.

Exceptions would protect insurers short-term

profitability and are rationalized by threats and

overhyped warnings of catastrophe in the

individual market. AHIP, BCBSA and some insurance

commissioners have commented that companies

with extremely low medical-loss ratios would find

it disruptive and destabilizing to obey the new

law immediately and would consider withdrawing

from various geographic markets before complyingwith the new standards on the schedule set by

Congress, a form of blackmail used on regulators.43

In some states, regulators will seek exceptions to

temporarily shield insurers from the new law in the

name of consumer protection. But Americans must

ask: is it really in our best interest to bend the law

to accommodate insurers selling subpar coverage

that would leave enrollees at risk of financial ruin

in the event of a medical emergency?


8/18

After sponsoring a recent meeting of market

analysts, industry representatives, actuaries and

regulators, the Robert Wood Johnson Foundation

reported that most of the large, established

carriers offering coverage in the individual market

will be able to meet the MLR thresholds.

44

The long-termsuccessofminimumMLR

standardsinimprovinginsurance value willbe

heavilyinfluencedbythe abilityofregulators

todefeatinsurerstransparentattemptsto

restore the oldstatusquo. Whether the intent

of Congress is ultimately respected depends on

how state and federal regulators define which

expenditures should be classified as legitimate

medical costs. Over the past 10 years, health insurers

have crowed to Wall Street about how low theyvedriven their MLRs. Now that the new law sets

national MLR floors, insurers are scrambling to

take those old numbers that pleased investors so

much, pretend they never happened, and count

as medical all the costs they used to consider

administrative to burnish their reputations as

expert managers.

WellPoint has already reclassified more than

$500 million of administrative costs as medical

expenses in its bid to stampede regulators intoaccepting its preferred formula.45,46WellPoints

unilateral reclassificationwouldtheoretically

increase its corporate-wideMLRby1.7percentage

pointswithoutit changinganyofitswasteful

operations, itslavish executive compensation

programs, or itsinefficient claimsprocessing.

Other insurers are now claiming that the costs of

denying care (so-called loss adjustment expenses),

fraud prevention, network management, and

provider credentialing, all clearly and historically

administrative functions, are actual medical carefor purposes of the MLR requirement. This is not

what the law says and not what Congress intended.

Insurers have used these same reclassification

techniques when facing possible state actions

setting minimum medical-loss ratios.47 In 2007,

when California was considering a minimum

MLR, one insurer proposed that any services that

allegedly improved health outcomes or reduced

health care costs should be included in the medical

portion of the ratio, citing a grab-bag of

administrative expense categories. As the NAIC

consumer panel recently said:

It is important to note that until lawmakersbegan focusing on MLRs, insurers thought

that expenses related to those costs were

categorized appropriately as administrative

costs not medical costs. Significantly, when the

California legislature did not enact a minimum

MLR provision, the company took no action to

reclassify the expenses.

Indeed, the new law reduces administrative costs

for private plans, which should make it easier for

them to meet the new MLR rules if they do notalready do so. The NAIC consumer panel:

[B]ecause the new law will in 2014 prohibit

insurers from denying coverage or refusing

to pay claims for anyone with pre-existing

conditions, insurers after that date should

no longer need to spend as much as they do

today on underwriting activities. Similarly,

since Congress has passed a healthcare reform

package, funds spent on lobbying should

be greatly reduced. When underwriting andlobbying-related expenses are reduced, insurers

MLRs should rise as a direct consequence,

which will make it considerably easier for

them to comply with the minimum ratios set

forth in [the Affordable Care Act]. MLRs will

rise even further if the amount of money paid

in commissions to brokers declines once the

[health insurance] exchanges are in operation

[in 2014].48

Although they are flush with cash, insurers havenonetheless been sloppy in performing core

administrative tasks. One out of every five health

insurance claims is processed and paid inaccurately.49

Doctors and health plans could save about $778

million a year in unnecessary administrative

costs if claims accuracy improved by only 1

percent, and $15.5 billion a year if inaccuracy were

entirely eliminated.50


9/18

Instead of improving operations, companies have

chosen to spend available capital funds to jack

up the price of their stocks. Since 2003, the seven

largest for-profit health insurers spent $57.6

billion to repurchase their own stock in order to

reduce the number of outstanding shares andraise earnings per share.51 These maneuvers are

especially beneficial to CEOs, whose bonuses and

stock options are directly related to their success

at boosting share prices.

Insurers would prefer to continue shifting billions

of dollars in premiums to Wall Street investors and

top insurance executives. Health insurance CEOs

have made a profitable science out of denying

medical claims for needed care, excluding the sick

from coverage and handling claims inefficiently.These practices have created stupendous personal

compensation packages for CEOs. The chief

executives of the top 10 for-profit health insurers

collected more than $692 million in total

compensation from 2000 through 2008.52

The Senate Commerce Committee agrees that HHS

and state insurance commissioners must be vigilant

and focus on ensuring that consumers benefit from

the MLR standards.53 And the NAIC consumer

representatives believe it is critically important thatthe regulations prohibit insurers from classifying or

reclassifying certain administrative expenses as

medical expenses, and from taking other actions

unrelated to quality improvement that would

automatically increase their medical-loss ratios...

We believe that allowing insurers to boost their

MLRs in such artificial ways would violate

Congressional intent. We also believe that because

the development of definitions and measurements

of insurers MLR requirements is of such critical

importance to consumers, the process of developingthe definitions and standards must be transparent

and include consumer group participation and

input.54

Joining in with the largest health insurance

companies in appealing for relief from the MLR

standards are smaller insurers, such as Assurant

Health, which sells individual market coverage

across the country. Assurant Chief Actuary

Steve Dziedzic told Florida health insurance

regulators that the national MLR requirement

in the individual market should be reduced

to protect agent and broker commissions and

complained that the new law fails to recognize thecomplicated set of administrative and distribution

costs the company is obligated to honor. Forcing

insurers to alter arrangementseven if those

arrangements have contributed to a grossly

inefficient and unfair health insurance system

might cause its business to falter and become

insolvent, Dziedzic said.55 These insurers in essence

argue that it is better for Americans and taxpayers

to spend more on insurance than it is to drive

insurers to become efficient.

Requiring Assurant to adapt to the new MLR

rules is clearly in the public interest. Assurant is

one of the worst offenders in the way it treats

customers who have fallen ill. The company has

demonstrated a pattern of arbitrary or abusive

coverage denials, according to Connecticut

Attorney General Richard Blumenthal. In the case

ofMitchell v. Fortis Insurance Company[an Assurant

subsidiary], a South Carolina court found that

Fortis pre-programmed its computer to recognize

billing codes for expensive health conditions,triggering an automatic fraud investigation. The

court awarded $15 million to the plaintiff, who

was improperly denied coverage by Fortis for his

AIDS treatment.56

Another company with a similar business model

is HealthMarkets Inc., which operates MEGA

Life and Health Insurance Company, Mid-West

National Life Insurance Company and Chesapeake

Life Insurance Company. In 2008, HealthMarkets

was fined $20 million by 48 states, whose healthinsurance regulators documented multiple problems

with consumer disclosure, oversight and training of

agents, claims handling, and complaint handling

practices.57 In the same year, Maine officials fined

the same company $1 million for using a flawed

method of determining premiums for individual

health insurance policies and required the company

to refund $4.6 million in overpaid premiums, plus

interest, to consumers.58


10/18

Under the Affordable Care Act, states retain the

power to set minimum medical-loss ratios that

exceed the federal standards. New York state

lawmakers recently gave state insurance regulators

the power to protect consumers from health insurerprofiteering. The New York law requires health

insurers to spend a greater share of premium revenue

on medical claims than in the past. The law raises

the minimum MLR from 75 to 82 percent for small

businesses and from 80 to 82 percent for individuals

(compared with 80 percent for each under the

Affordable Care Act). The bill also reinstated the

New York State Insurance Departments authority

to review and approve health insurance premium

increases before they take effect. Since 2000, a file

and use law limited the states power to rejecthealth insurance premium increases and allowed

health insurers to raise rates as high as they wanted

without public accountability.

Deregulation of health insurance premiums is a

failed experiment leading to unjustified premium

increases and more people losing their health

insurance coverage, Governor Paterson said about

the bill. Health care is a right, not a privilege, and

requires sound, balanced regulation to make sure

insurance premiums are fair and justified. Thelaw will help make coverage more affordable and

allow more small businesses and individuals to

keep their coverage, he said.59

The New York law requires health insurers to apply

for permission to raise premiums. The Department

will have the opportunity to review the rate

applications, as well as the underlying calculations,

to make sure rates are not excessive, and may

approve, modify or disapprove the rate application.

The law applies to all rate increases taking effectafter Oct. 1, 2010.

Even though some state regulators, such as Steve

Poizner, the Republican insurance commissioner

of California, have taken aggressive action on

individual rate hike requests, they continue to

balk at the idea that federal action is needed. Since

April 2010, two California insurers have admitted

to stunning math errors resulting in premium

rate calculations that would have illegally enriched

the companies had they not been discovered

by regulators. California Governor Arnold

Schwarzenegger and Poizner have contorted their

political rhetoric to take credit for those discoveries

while, incredibly, voicing renewed opposition tofederal legislation to set national standards in this

area.60 Poizners press secretary, Darrel Ng, admitted

that protecting consumers through regulation is

incompatible with his bosss ideology. First of all,

our insurance commissioner is Republican and

opposes prior approval for health insurance rates at

a philosophical level, Ng said.61

Premium rate reviewisanecessary complement

tostrongMLR enforcement. Without rate review,

insurers could circumvent the intent of Congressby raising premiums as a way to preserve profit

levels and administrative inefficiency within the

expanded revenue base. In effect, MLR determines

how the pie is divided, but premium review

controls the size of the pie. The Affordable Care

Act makes available $250 million in grants to

states over the next five years for premium review,

beginning with up to $1 million per state this

year.62 Premium review funds are available to any

state, irrespective of a state regulators authority

to reject or adjust insurance rates, and promise toshine a bright light on information that insurers

submit to under-resourced state regulators.

On Capitol Hill, California Senator Dianne Feinstein

and Illinois Representative Jan Schakowsky have

introduced S.3078/H.R.4757, the Health Insurance

Rate Authority Act of 2010, which will empower the

HHS Secretary to review and reject unfair premium

rate increases in the large number of states where

insurance commissioners lack the authority to do so.63

This will allow the Secretary to serve as a backstopfor consumers and modify premium increases

based on an accurate accounting of insurers costs.

The MLR fight echoes the struggle over the

Affordable Care Act that played out for more than

a year on Capitol Hill, but now the battleground

has moved a few blocks west to the Department of


11/18

Health and Human Services. Insurance companies,

which are always among the most important

players in statehouses, are accustomed to having

their way with state regulators. Even big states like

California, with the largest funding and staffing

of health plan regulators, realized only recently

that major insurers such as WellPoint and Aetnafor years may have been submitting inaccurate

financial data to regulators to justify huge rate

increases.64,65 The failings of state regulation and, in

some instances, the inattention of state regulators

make the federal rules crucial to fulfilling the

promise of the new health care law.

Despite their cost-containment rhetoric, insurers

are trying to build status-quo inefficiencies into

future premium calculations by excusing bloated

expenses, such as lucrative agent and broker fees

and extensive marketing costs. Instead they should

join consumers in finding ways to identify and cut

administrative expenses and bring stratospheric

executive pay down to earth.

The American Hospital Association, the American

Medical Association, Health Care for America Now,

consumer representatives to NAIC, and others haveurged the insurance commissioners and Sebelius

to craft rules that respect the intent of Congress

and are based on the historical definition of MLRs.

Insurers should not be allowed to game the system.

To protect the historic gains achieved by passage

of the Affordable Care Act, it is imperative that the

nations insurance commissioners and the Obama

administration stand firm and adopt sensible rules

that do not allow the health insurance industry

to wield its enormous influence to undo this

fundamental reform.


12/18


13/18


14/18


15/18


16/18

Endnotes

1 Committee on Commerce, Science, and Transportation, Office of Oversight and Investigations, Majority Staff, Implementing HealthInsurance Reform: New Medical-Loss Ratio Information for Policymakers and Consumers, April 15, 2010. Accessed at: http://commerce.senate.gov/public/?a=Files.Serve&File_id=be0fd052-4ca6-4c12-9fb1-a5e4a09c0667.

2 Carl McDonald, The Game Has Changed, But Still Trying to Play by the Old RulesMLR Update, May 12, 2010, Oppenheimer & Co.Accessed at https://opco.bluematrix.com/docs/pdf/b44e082a-28b4-43af-af6a-de5478d169be.pdf.

3 Health Care for America Now, Health Insurers Break Profit Records as 2.7 Million Americans Lose Coverage, February 2010. Accessedat: http://hcfan.3cdn.net/a9ce29d3038ef8a1e1_dhm6b9q0l.pdf.

4 Wendell Potter, Center for Media and Democracy, State Insurance Commissioners Take Baton From Congress, March 27, 2010.Accessed at: http://www.huffingtonpost.com/wendell-potter/state-insurance-commissio_b_515778.html.

5 Ibid.

Senator John D. Rockefeller IV letter to Commissioner Jane L. Cline, President, National Association of Insurance Commissioners, July

20, 2010. Accessed at: http://commerce.senate.gov/public/?a=Files.Serve&File_id=d47a4fc7-39ce-4d9d-92c5-3337003d1d74.

7 Robin Goldwyn Blumenthal, Coventry Heads for the Recovery Room, Barrons, July 3, 2010. Accessed at: http://online.barrons.com/article/SB50001424052970203296004575336881883071538.html#articleTabs%3Darticle.

8 Paul Wynn, What the For-Profit Trend In Health Care Really Means, Managed Care, June 1996. Accessed at: http://www.managedcaremag.com/archives/9606/MC9606.profit.shtml.

9 Main Street Alliance, National Minimum Medical-Loss Ratio Would Save Tens of Billions of Dollars for Businesses, Individuals,December 2009. Accessed at: http://hcfan.3cdn.net/f53d56cf94ccc62a26_n9m6iicd3.pdf.

10 WellPoint Inc., Family of Companies. Accessed at: http://www.wellpoint.com/business/about_family.asp.

11 American Medical Association, AMA Study Shows Competition Disappearing in the Health Insurance Industry, February 23, 2010.Accessed at: http://www.ama-assn.org/ama/pub/news/news/health-insurance-competition.shtml.

12John Holahan and Linda Blumberg, Can a Public Insurance Plan Increase Competition and Lower the Costs of Health Reform?,Urban Institute Health Policy Center, 2008.

13 Health Care for America Now, Health Insurance Company Abuses, June 2009. Accessed at: http://hcfan.3cdn.net/d489f04dd6172aae34_4sm6iijoh.pdf.

14 PricewaterhouseCoopers, Beyond the sound bite: Review of presidential candidates proposals for health reform, 2008. The medical-loss ratios are based on premium figures from fully insured covered lives; also, company filings with the U.S. Securities and ExchangeCommission.

15 Health Care for America Now, Health Insurers Falsely Claim Rising Costs Justify Soaring Premiums, March 2010. Accessed at: http://hcfan.3cdn.net/578b1f7456962bfa7a_r6m6bhcjn.pdf.

16 Health Care for America Now, Premiums Soaring in Consolidated Health Insurance Market: Lack of Competition Hurts Rural States,Small Businesses, May 2009. Accessed at: http://hcfan.3cdn.net/1b741c44183247e6ac_20m6i6nzc.pdf.

17 Chen May Yee, UnitedHealth settles Ingenix suit, Minneapolis Star-Tribune, January 15, 2009. Accessed at: http://www.startribune.com/business/37638584.html.

18 U.S. Food and Drug Administration, Greater Access to Generic Drugs: New FDA Initiatives to Improve the Drug Review Process andReduce Legal Loopholes, February 25, 2010. Accessed at: http://www.fda.gov/Drugs/ResourcesForYou/Consumers/ucm143545.htm.

19 PricewaterhouseCoopers, Beyond the sound bite, op. cit. also, Wendell Potter, The Insurance Industrys Lethal Bottom Lineand Sen. Al Frankens Solution, Huffington Post, December 6, 2009. Accessed at http://www.huffingtonpost.com/wendell-potter/theinsurance-industrys-l_b_382001.html.

20 Families USA, Medical-Loss Ratios: Evidence from the States June 2008. Accessed at: http://www.familiesusa.org/assets/pdfs/medical-

loss-ratio.pdf.21 Blumenthal, Coventry Heads for the Recovery Room, op. cit.

22 McDonald, The Game Has Changed, op. cit.

23 Committee on Commerce, Implementing Health Insurance Reform, op. cit.

24 U.S. Center for Medicare & Medicaid Services.


26 After writing the report, Carl McDonald left Oppenheimer & Co. and has joined Citigroup. This report makes use of data published byOppenheimer, which is not a member of the Health Care for America Now coalition. Neither McDonald nor Oppenheimer collaboratedwith HCAN on this report.



17/18

28 Ibid.

29 Texas Department of Insurance, Health Maintenance Organizations Financial Report Basic Service 2008 Annual Information.Accessed at: http://www.tdi.state.tx.us/reports/fin/documents/f1208a.pdf.

30 Carl McDonald, The Average Person Thinks He IsntMinimum Medical-Loss Ratio Analysis, Oppenheimer & Co., April 8, 2010.Accessed at: https://opco.bluematrix.com/docs/pdf/87cd8a8e-a0e1-474f-aaa5-0701b3171ef7.pdf.

31 Carl McDonald, Heads I Win, Tails You Lose, Citigroup Global Markets, July 12, 2010. Accessed at: https://www.citigroupgeo.com/

pdf/SNA59110.pdf.32 Comment letter from Elizabeth P. Hall, WellPoint Vice President of Public Policy, to HHS Secretary Kathleen Sebelius, May 14, 2010.


34 Ibid.

35 U.S. Center for Medicare & Medicaid Services.

36 California Medical Association, 15th Annual Knox-Keene Health Plan Expenditures Report, June 2008. Accessed at: http://www.cmanet.org/upload/knox_keene_08.pdf.

37John Rex, Stat Check: The Cycle vs. the Minimums, May 7, 2010, J.P. Morgan.


39 Christine Arnold, UnitedHealth Group Quick Take: 2Q10 Earnings A Great Showing, Cowen & Co., July 20, 2010.

40 Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Expenditures and Selected Economic Indicators,Levels and Annual Percent Change: Calendar Years 2003-2018. Accessed at: http://www.cms.gov/NationalHealthExpendData/downloads/proj2008.pdf.

41 Wendell Potter, State Insurance Commissioners Take Baton From Congress, op.cit.

42 Avery Johnson, Game Changer Rule Looms for Health Insurers, Wall Street Journal, July 1, 2010. Accessed at: http://online.wsj.com/article/SB10001424052748703374104575336951608609446.html.

43 Testimony of Steve Dziedzic, Chief Actuary of Assurant Health, Joint Public Hearing of Florida Office of Insurance Regulation and theFlorida Health Insurance Advisory Board on Market Impact of Federal Health Care Legislation, May 4, 2010.

44 Robert Wood Johnson Foundation, Recognizing Destabilization in the Individual Health Insurance Market, July 2010. Accessed at:http://www.hcfo.org/files/hcfo/HCFO%20Policy%20Brief%20July%202010.pdf.


46James A. White, WellPoint Spells Out 2010 Outlook, Using a Lot of Caveats, Wall Street Journal, March 17, 2010. Accessed at: http://blogs.wsj.com/health/2010/03/17/wellpoint-spells-out-2010-outlook-using-a-lot-of-caveats/.

47 National Association of Insurance Commissioners Consumer Representatives, PPACA Implementation: Consumer Recommendationsfor Regulators and Lawmakers, May 2010.

48 Ibid.

49 American Medical Association, New AMA Health Insurer Report Card Finds Need for More Accuracy, June 14, 2010. Accessed at:http://www.ama-assn.org/ama/pub/news/news/2010-report-card.shtml.

50 W. Scott Bailey, Doctors say insurers can trim billions in health care costs, San Antonio Business Journal and Business Courier ofCincinnati, June 25, 2010. Accessed at: http://www.bizjournals.com/cincinnati/othercities/sanantonio/stories/2010/06/28/story7.html?b=1277697600^3553221&s=industry&i=insurance.

51 U.S. Securities and Exchange Commission filings.

52 Health Care for America Now, Total Compensation for CEOs of Major Health Insurers, 20002008. Accessed at: http://

healthcareforamericanow.org/page/-/documents%20for%20download/CEO%20Compensation%20Top%20Health%20Insurers%202000-2008%20%281%29.pdf.


54 National Association of Insurance Commissioners Consumers Representatives, PPACA Implementation, op. cit.

55 Testimony of Steve Dziedzic, op. cit.

56 Connecticut Attorney Generals Office Press Release, Attorney General Says Court Ruling Confirms Suspicions Of Abusive, PervasiveInsurance Coverage Denials, March 15, 2007. Accessed at: http://www.ct.gov/ag/cwp/view.asp?Q=333838&A=2788.

57 Press Release, Rhode Island Office of the Health Insurance Commissioner, June 21, 2008. Accessed at: http://www.ohic.ri.gov/documents/Press/PressReleases/2008megalife/2008%20MEGA%20multistate%20press%20release%20final.pdf.

58 Press Release, Maine Bureau of Insurance, April 3, 2008. Accessed at: http://www.maine.gov/tools/whatsnew/index.php?topic=INS-PressReleases&id=53499&v=Default.


18/18

59 New York State Gov. David A. Paterson, Governor Paterson Signs Landmark Health Insurance Reform Legislation, June 9, 2010.Accessed at: http://www.state.ny.us/governor/press/060910HealthInsuranceReform.html.

60 California Office of the Governor, Gov. Schwarzenegger Announces State Medical Insurance Rate Review Proposal under FederalHealth Care Reform, July 7, 2010. Accessed at: http://gov.ca.gov/press-release/15548/

61 Gloria Park, States resist HHS premium control, Politico, July 6, 2010. Accessed at: http://www.politico.com/news/stories/0710/39377.html#ixzz0t84rqVR5.

62 Health and Human Services Department Press Release, Secretary Sebelius Announces $51 Million in Affordable Care Act Grantsto Innovate, Improve, and Enhance Health Insurance Premium Rate Review, June 7, 2010. Accessed at: http://www.hhs.gov/news/press/2010pres/06/20100607a.html.

63 Health Care for America Now, Health Insurance Industry Profits Surge Again, May 2010. Accessed at: http://hcfan.3cdn.net/d605c2281191ac1f04_kam6bn3ga.pdf.

64 New York Times, The Anthem Saga, May 10, 2010. Accessed at: http://www.nytimes.com/2010/05/10/opinion/10mon1.html?hp.

65 California Department of Insurance, Insurance Commissioner Steve Poizner Announces Examination of Anthems Claims-RelatedData, May 5, 2010. Accessed at: http://www.insurance.ca.gov/0400-news/0100-press-releases/2010/release061-10.cfm.

july 2010 report from health care reform now

Documents